News

Offline prices still carry the day in grocery shopping

February 16, 2016 01:57 PM

Anthem Marketing Solutions’ ninth online-offline pricing survey for the first time this year included grocery prices. While 75% of prices of all products match online and offline, the 25% that don’t match strongly favor online prices. 75% of the mismatched prices were lower online than offline. When the online price is lower than the offline price, the discount is 40%; when the offline price is lower, the discount is 31%.

The exception to the online advantage is grocery, where prices were on average 25% higher online than offline. Shoppers pay the highest premium at Netgrocer, where prices are 42% higher than average. At Peapod, No. 69 in the Internet Retailer 2015 Top 500 Guide, the average price is 6% higher. Groceries at Amazon.com (No. 1) are 18% lower than average. The mix of grocery retailers included some sellers of food items focused on convenience—Walgreen Co. (No. 44) 25% higher than average, and CVS Caremark Corp. (No. 109) 5% higher, for instance—as well as such traditional grocers as Mariano’s, 18% lower than average, and big-box mass marketers Target Corp. (No. 16) 9% lower and Wal-Mart Stores Inc. (No. 3) 19% lower.

“Grocery retailers need to focus on freshness, selection, and prepared foods to drive store traffic, highlight price savings when they exist on high-volume staples,” Anthem says in its report “Deal Seeking: Online vs. In-Store.” “That’s what is going to keep the majority of consumers from shifting their grocery shopping online.”

Given the high match-up between online and offline prices, Anthem concludes that showrooming, the consumer practice of checking out items offline then buying them at a lower price online, may be fading. “Retailers have done the hard work to eliminate the threat; accordingly, they should showcase price parity as much as possible, and focus on educating consumers about the benefits of immediate gratification,” the Anthem report says.

Anthem also encourages online retailers to be more judicious in offering discounts lest they create the consumer expectation that lower prices are always just around the corner. “You’ve already won the pricing war vs. brick & mortar stores, now focus on convenience, repeat replenishment, and other benefits your channel can offer to keep consumers loyal,” Anthem says.

Anthem compared prices by choosing products that were available in three or more stores and at three or more websites. Prices do not include shipping and tax.